Ever since Netflix began streaming its TV and film content, we’ve come to see the streaming service as a competitive alternative to pay-TV distributors. Here comes a henhouse that’s letting the fox in to set up shop.

But there’s a more complicated picture here, one that may not make the Netflix-Virgin Media partnership seem as important as Netflix’s record stock surge on Sept. 10 would indicate.

In truth, this deal isn’t impressive in and of itself; its significance is more rooted in what it may, or may not, portend.

At first blush, the Netflix-on-cable concept sounds like CEO Reed Hastings has secured himself some prime real estate in U.K. homes. But consider that Virgin Media is making Netflix available to only the 1.7 million subs who use Tivo set-top boxes.

Furthermore, Netflix will be just an app in the cable system’s VOD platform. Though that will allow Netflix content to surface in a Tivo user’s cross-platform search function, it’s not like Netflix is airing on channel 2.

There’s so much more that cable operators could do with Netflix that would make this a more impactful partnership for both parties. They could conceivably be bundling Netflix with a multichannel package rather than as an add-on with a separate billing system. That could sweeten their double- or triple-play offerings, giving subs extra incentive to take broadband as well.

It is eminently possible that one of these scenarios is the future of Netflix’s arrangement not only with Virgin Media, but with other pay-TV operators all over the world. Once misunderstood as the enemy, cable operators may be just the thing necessary for Netflix to make good on Hastings’ pledge that his service could one day reach as many as 90 million subs worldwide.

Imagine if Virgin Media customer-service representatives were upselling Netflix like it was HBO. Now that would translate to the kind of subscriber and revenue growth for both companies that just isn’t going to happen the way the deal is currently configured.

But analysts seem to have made the assumption that the Virgin Media pact is surely the first of many such deals to come. What that assumption is based on is unclear. Hastings first talked up the prospect of Netflix getting in bed with cable operators last February, and all he has to show for making that a reality since then is one agreement.

Why that should give anyone confidence that Virgin Media represents momentum for more such deals, as opposed to it being an outlier, is a mystery.

It is entirely possible that the arrangement, which investors seem to have treated like the beginning of increased integration between Netflix and pay-TV firms, is more like the end.

MSOs could be feeling queasy about Netflix being on equal footing both inside and outside the cable system; participating distributors risk tempting their own subs to cut the cord.

And if a Comcast began selling Netflix like it was HBO, what would HBO think of that? Can’t imagine Time Warner would be content to have HBO Go handcuffed to its distribution partner while Netflix was free to play both sides of the fence.

Maybe Netflix has reasons to be wary, too. While partnering with cable could dramatically grow its sub base, that could come at a hefty cost. Being part of the bundle means cable operators takes a sizable cut of the revenues from the Netflix subscriptions they sell. Hastings may prefer to go it alone.

It’s hard not to read into the total silence he’s maintained on this subject since last February that he’s had a change of heart. What, if anything, comes after Virgin Media will be the litmus test. Your move, Reed.

I think you hit on the most important point at the end. MVPD’s typically take a significant cut of the price they charge for HBO, which I assume they are demanding from Netflix (if they didn’t, then HBO and Showtime would be quite upset and demand to re-negotiate if they don’t have an MFN that would take care of this problem). I don’t think enough margin is built into Netflix’s current $7.99 monthly price to their current subscribers to make the type of deal you’re suggesting pencil out. To make MVPD distribution work they’d have to (a) raise their pricing for all subscribers (which would cause another firestorm of negative customer reaction), (b) raise the price only for MVPD subscribers (and why would anybody pay that when they can get it cheaper direct), or (c) keep the $7.99 price for all subscribers and accept the lower (or negative) margin on MVPD subscribers. None of these options is an easy choice, and I suspect that’s why they don’t have any of these types of deals signed yet. (Note: views expressed are my own and not that of my employer)